Note: PowerPoint and audio for the December 17, 2015 Webinar, “Basic Manual: Organization, Changes, Reorganization, Favorite and Little Known Rules” is now available on our website. 1
ADDITIONAL HOUSEKEEPING INFORMATION Because of opinions expressed by the Texas Insurance Department concerning rebates, legal credit is available only to: Attorneys who own title agencies that are Stewart Title Guaranty Agents Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity If you are claiming legal credit for this web conference, please provide in your email which category you are in. 2
We welcome any other lawyers to listen, but cannot provide continuing education credit to you. 3
ACKNOWLEDGE THE KNOWLEDGE! Richard L. Black Associate Senior Underwriting Counsel Austin, TX
ACKNOWLEDGE THE KNOWLEDGE! Acknowledgements, New Notary Law, Correction Documents, and Recording 7
New Notary Law: The Final Chapter? TEX. GOV. CODE § 406.001(a) effective 1/1/2016: -- Texas notary public’s seal of office must contain notary’s State -issued identifying number. --TEX. ADMIN. CODE §87.4: Inclusion of notary’s ID number in the seal is required only with new/renewed notary commissions after January 1, 2016. --RECOMMENDED: Upgrade to a compliant seal now! 8
Recording of Documents What entitles a document to be recorded in the County Clerk’s records? --Statutory acknowledgment (short-form or long-form) under Chapter 121, TEX. CIV. PRAC. & REM. CODE; --Jurat (“subscribed and sworn to before me”) under TEX. PROP. CODE § 12.001(a); OR --Certification or apostille under TEX. PROP. CODE § 12.001(a), relating to public documents. 9
Recordation and Notice What is the purpose and benefit of recording a real estate document? --Acknowledgement = entitlement to recording. -- Recording = constructive notice versus actual notice. --Binding effect of unrecorded documents. --Multiple grantors. --Abstract of Judgment exception: Recording and indexing . 10
Who Can Take Acknowledgements Part 1 According to TEX. CIV. PRAC. & REM. CODE § 121.001: --For general purposes when done within Texas: --District Court clerk; --County Court judge or clerk; --Notary Public. --For general purposes when done outside Texas, but within the United States or its territories: Basically the same. 11
Who Can Take Acknowledgements Part 2 When done outside the United States or territories (CIV. PRAC. & REM. CODE § 121.001): --U.S. State Department personnel (consul, deputy consul, commercial agent, consular agent, commissioner, or charge d’affaires ) accredited to and resident in the country; OR --Notary Public or other official authorized to administer oaths in the jurisdiction where acknowledgement is taken. 12
Who Can Take Acknowledgements Part 3 Military personnel anywhere in the world (CIV. PRAC. & REM. CODE § 121.001): --Acknowledgement by U.S. service member or member’s spouse can be taken by commissioned officer in any United States military service branch. -- Presumption of acknowledgement’s regularity arises when certificate shows officer’s rank and service branch. --No seal required. --TEX. GOV. CODE § 602.005: Same for jurats. 13
Acknowledgements Taken in Federal Prison Federal penal/correctional institutions (18 U.S.C.A. § 4004): --Acknowledgor can be any officer, employee, or inmate of the institution. --Acknowledgements can be taken by wardens and superintendents, associate wardens/superintendents, chief clerks, and record clerks. --No fee/compensation is allowed. 14
Texas Prison/Jail Inmate’s Unsworn Declaration TDC or jail inmate may make a “unsworn declaration” in lieu of declaration, verification, or certification required by statute (TEX. CIV. PRAC. & REM. CODE §§ 132.001 — 132.003). --Must be in writing and subscribed by declarant. --Prescribed statutory form of declaration must be used. -- If inmate’s unsworn declaration is the equivalent of a jurat, will it also serve as an acknowledgement? 15
Transactional Disqualification When is a Notary Public considered disqualified from taking an acknowledgement? --Party to the instrument or spouse of a party. --Financial interest in the transaction. --Participant in an entity who is a party. --Trustee/beneficiary under trust involved in the instrument (including a Deed of Trust trustee!) --Agent/attorney-in-fact for another party in transaction. 16
Notary Public as Surrogate Signer Notary public taking acknowledgement of a physically disabled person may sign for the acknowledgor (TEX. GOV. CODE § 406.0165): --Disability of the requesting party must be severe enough to prevent making personal signature or mark. -- Notary’s surrogate signing must be done in the presence of one disinterested witness. --Required statutory statement under the surrogate signature identifies the witness and cites the statute. 17
Witness Acknowledgement Signer’s acknowledgement can be remote from notary by means of a “witness acknowledgment” (TEX. CIV. PRAC. & REM. CODE §§ 121.009 — 121.010): --Witness must sign the acknowledged document as witness to the signer’s signing or to signer’s oral declaration of acknowledgment. -- Witness later appears before notary, and notary makes a statutory certificate of witness’ testimony to be attached in lieu of signer’s regular certificate of acknowledgment. 18
Proof of Instrument by Handwriting Instrument may qualify for recording based on handwriting evidence and notary’s statutory certification (TEX. CIV. PRAC. & REM. CODE § 121.001). --Grantor and all witnesses must be dead, out-of-state, whereabouts unknown, or legally incompetent. --Notary takes handwriting evidence by written deposition from at least two disinterested persons which is incorporated into notary’s certificate attached to instrument for filing. 19
Acknowledgment Not Required F ederal and State of Texas “grants” are recordable without further acknowledgement or proof (TEX. PROP. CODE § 12.006). -- Attorney General’s Opinion No. WW -805 (2/18/1960): A properly executed and authenticated deed from the Veterans Land Board of the State of Texas qualifies as a “grant” under this statute. --Also extends to land patents signed by the Governor of Texas. 20
When Notary Seal Is Not Required Acknowledgement lacking notary seal is NOT invalid when taken in another U.S. state where use of seal is not required (TEX. PROP. CODE § 12.001 & TEX. CIV. PRAC. & REM. CODE § 121.004). --TEX.GOV. CODE § 405.019 requires Texas Secretary of State to distribute a list of other U.S. states and territories that require a notary seal (now on-line): http://www.sos.state.tx.us/statdoc/notary-seal-list.shtml 21
Acknowledgor’s Required Identification Notary’s taking of acknowledgement requires photo + signature federal- or state-issued identification (TEX. CIV. PRAC. & REM. CODE § 121.005). Two statutory alternatives are allowed: --Foreign passport ( but only in a “residential real estate transaction ”); or --Affidavit of credible witness known to the notary who vouches for the identity of the acknowledgor. 22
Acceptable Defects in Acknowledgements What defects in the certificate of acknowledgement are “harmless error”? --Missing state or county name in caption; -- Mistaken pronouns (e.g. “he” instead of “she”); --Missing date of acknowledgment; --Minor name variance, instrument vs. certificate; or --Variance between captions, instrument vs. certificate. 23
Critical Defects in Acknowledgements What defects in a certificate of acknowledgement are “fatal” to valid recordation? --Omission of acknowledgor’s name from certificate; --Significant name variance, certificate versus instrument; --Omission of word “acknowledged” in the certificate; -- Notary’s/officer’s failure to sign the certificate; --Absence of seal when seal is applicable; or -- Notary’s/officer’s disqualification evident on face. 24
Statutory Limitations Applicable to Defective Certificates of Acknowledgement If no suit raises the issue, a defective acknowledgement is considered “cured” after two (2) years in the real estate record. --TEX. CIV. PRAC. & REM. CODE § 16.033(a)(8): Coverage for defective acknowledgements added in 1993. -- Statutory “cure” applies to EVERY instrument that fails to show “an acknowledgement or jurat that complies with applicable law,” including complete lack of a certificate. 25
Correcting Defective Acknowledgements--Old School Three traditional approaches: --Original notary public corrects defect in the certificate of acknowledgment, and affected instrument is re-filed; OR --Grantor re-acknowledges instrument before a different notary public who attaches a new certificate, and affected instrument is re-filed; OR --Grantor executes full correction instrument with fresh acknowledgement by same or different notary, which is filed to replace instrument with the defective certificate. 26
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